Garberville Sanitary District has hit a major stumbling block in its drinking water treatment upgrade project, GSD capital projects manager Jennie Short told the board of directors at their board meeting last Tuesday, Oct. 9.
All four bids received for the project were significantly higher than projected engineering costs and all exceed GSD’s current funding capacity.
GSD has been promised a grant of $3 million and a zero-percent loan of $2.3 million from the California Department of Public Works, Drinking Water Division. SHN Engineering of Eureka, which completed the design and construction planning, projected construction costs of $4.4 million.
Engineering, environmental review, and permit costs come to approximately $850,000, bringing total estimated cost of the project to $5.25 million, a little less than the CDPH funding package.
But the lowest bidder, T and S Construction of Sacramento, who built GSD’s upgraded wastewater treatment plant (completed in 2010), bid a little over $5.1 million for the drinking water project.
Three other bidders came in at $5.6 million, $5.8 million, and nearly $6.8 million.
Combined with the $850,000 that has already been spent on planning and design, even the lowest bid exceed the funding by $650,000.
Additionally, the large spread between the lowest and highest bids means that Short and SHN need to closely analyze the bids to determine that they meet all specifications.
Less than half an hour before the meeting began, Short received a call from a CDPH representative, who said the state agency could extend the zero percent loan to as much as $3.75 million if GSD can prove it is able to pay back the loan within the standard 30 year period. (CDPH grants do not exceed $3 million.)
The catch is that this would increase GSD’s yearly loan payments from $78,000 per year to $126,000 per year. This would in turn require significant rate increases to cover the increased debt.
Short and Mike Veach, the SHN engineer assigned to the project, told the board that they considered ways to slash construction costs by at least $1 million to fit the current funding package.
Unfortunately, in order to reach that goal, they would have to re-design the project, incurring new engineering costs.
The new design would also mean finding different sites for the new drinking water treatment plant and million-gallon storage tank. In both cases, GSD has negotiated or is negotiating easement agreements with the property owners for sites that accommodate the current design.
While several possibilities for re-siting these two major components exist, the new design and sites would mean starting the California Environmental Quality Act (CEQA) process over again, as well as new property acquisition agreements.
One of the property owners told Short and Veach that changing the acquisition agreement would require condemnation/eminent domain.
That process could take anywhere from 18 months to six years, Veach said, would itself cost a lot of money in legal fees, and might not be successful.
If the board chooses to consider new designs, GSD would have to reject all the bids received and re-bid a new project.
Short did not want to make a recommendation to the board until she and Veach had more time to analyze all the bids and consider all the options in detail, but she observed, "My gut feeling is that we’ll end up in the same place [financially] if we change the project. We’ve already spent $850,000 in planning and all we have is paper."
Furthermore, Veach added, it’s possible that the project would be disqualified from any CDPH funds if eminent domain is required. GSD’s contacts at CDPH are researching this possibility.
"If we don’t have the loan, we don’t have the project," said board member Rio Anderson.
The board approved payment of up to $5,000 to SHN so that Veach could analyze the bids. They also decided to put off making a decision until next month, when both the results of the analysis and GSD’s audited financial statements will be available.
Bulk Water Sales
Last month GSD received a letter from the State Water Resources Control Board-Department of Water Rights (DWR) stating that the agency had received a citizen complaint that GSD is selling bulk water to commercial companies that deliver bulk water outside the district’s designated "place of use."
The "place of use" is defined by GSD’s existing boundaries.
Even though the bulk water companies take water from a hydrant in Garberville, if the water is delivered outside GSD’s boundaries, GSD is in violation of its DWR permit and license, which allow the district to withdraw water from the South Fork Eel River.
In fiscal year 2011/12 GSD sold a total of more than 1.7 million gallons of water to six different bulk water suppliers. About two-thirds of that amount was sold to Pura Vida Water, owned by Heather Kornberg.
Kornberg attended last Tuesday’s board meeting and also wrote to DWR, explaining the need for water delivery to help rural residents get through dry spells, which she said have been increasing in length and severity in recent years. She noted that many of the properties Pura Vida serves have been established for many decades before current regulations were on the books.
Other members of the public, however, objected to delivery of South Fork Eel River water outside GSD’s boundaries because of the impact of additional water withdrawals on the river and wildlife.
"GSD does not own the river... it is entrusted to you," Dan Nicholson told the board. Don "Frenchy" Courtemanche noted that since both the state and the county require the availability of 420 gallons of water per day before permitting a house, GSD is "enabling illegal development" by selling bulk water to providers who in turn sell it to homesteads without adequate water sources.
GSD’s Tobin Well, which receives water from a spring on the east side of Garberville could potentially provide enough water for bulk sales because DWR does not regulate the use of groundwater.
District staff recently installed a meter to monitor the well’s output to see if its production is sufficient and reliable. Short asked for another 30 days to continue monitoring, and the board readily agreed.
Speakers who objected to bulk water sales also objected to the use of the Tobin Well. Nicholson pointed out that groundwater is a source of river water, while others said past reports indicate that the water level at the well is known to get very low and occasionally to dry out in the summer.
Garberville resident Jim Johnson said he didn’t object to the use of bulk water but was concerned that sales are on the "honor system," with the customers reporting how much water they’ve taken instead of having to use a locked and metered source.
"I could fill up my motel rooms every night if I left the door unlocked and told people you can pay me tomorrow if you feel like it," said Johnson, who owns the Humboldt House Inn.
"The bulk water [issue] caught us blindsided," board chair Dennis Bourassa admitted, adding he thinks that bulk water use has increased in spite of the fact that the other principal supplier, H20 To Go, now gets all of its water from the Benbow Water Company.
Short also reported on progress on GSD’s annexation process, which is intended to bring all areas that the district currently serves with water inside its legal boundaries.
Probably the trickiest issue in the proposed annexation is how to serve Southern Humboldt Community Park. Residences and outbuildings on the property had received water from the same meter that serves the "yellow house," which ended up in a different parcel under different ownership following a lot line adjustment.
Although that line has been in need of repair and out of service for many years as well as being on a parcel they no longer own, SHCP continues to pay GSD’s monthly charge and so claims the right to a separate connection for the park.
Last July the board approved annexing the whole 420-acre community park but placing a "service prohibition" zone on the entire property except for the four-acre area that encompasses two residences and farm outbuildings.
Following a meeting with county planning staff, GSD staff, staff from the Humboldt County Local Agency Formation Commission, and representatives of the GSD and SHCP boards, Short said the group determined that annexing only the four developed acres with conditions was more feasible and less likely to create loopholes than annexing the whole property with a service prohibition zone.
Conditions for annexation include installation of only one 3/4" connection for residential use, permanent prohibition of water service for further development, water use to be restricted to no more than 2,000 cubic feet per month, SHCP to pay for installation costs but the connection fee would be waived, a limited choice of places where the connection can be made, and a legally binding agreement as part of the application process.
Some members of the public objected that water used for vegetable washing at the farm building was a commercial rather than a residential use. Staff replied that the rates are the same for either residential or commercial use.
Others were concerned that calling for a "legally binding agreement" when SHCP applies for the connection suggests that the current agreement is not legally binding and therefore the terms could change following annexation.
The board agreed to staff’s request to go forward with the annexation application and CEQA documents with these provisions and authorized Short to spend an additional $3,000 to complete necessary paperwork. The $3,000 is part of the $80,000 already budgeted for the annexation process.
The board’s meeting schedule has been adjusted to make sure that all three of the remaining board members are available to make up the quorum needed to conduct business. The Oct. 9 meeting was considered the official September meeting.
Likewise, the October monthly meeting will be held on Monday, Nov. 5, beginning at 5 p.m. at the GSD offices in Garberville. All interested members of the public are welcome to attend.
The entire board packet and other information are available online at GSD’s website, www.garbervillesd.org. For questions, call the office at 923-9566 during business hours, Monday through Thursday.